Last August, President Obama and Congress put the U.S. economy on course to go over a "fiscal cliff." WSJ's David Wessel tells you everything you need to know about the "cliff" but were afraid to ask.

This transcript has been automatically generated and may not be 100% accurate.

I ... I ... last August President Obama and Congress did something really unusual ... they built a fiscal cliff ... a cliff as perilous as this one ... and they put the U S economy on course to go over this class at the end of the year ... unless they come up with some alternative way to reduce the deficit by one point two trillion dollars over the next decade ... well ... it's getting closer to the end of the year and there's no apparent progress towards diverting away from the way ... so that would mean ... taxes would go up a walk ... for almost everybody ... a broad swath of domestic and defense spending would be that they would be a huge blow to an already fragile economy ... forecasters say in almost surely would mean a renewed recession ... you get the point it's a big deal ... what would it take for us to step away from ... well ... like with any budget ... there's the money that comes in ... and the money that does that ... and when more money goes up that comes in ... there's a deficit ... we make things way way too complicated ... let me give you five facts about the federal budget ... which is pretty much all you need to know ... number one ... in two thousand eleven sixty three percent of all federal spending was on autopilot ... the money went out the door without any vote of Congress to pay for promises made in the past ... today social Security benefits ... Medicare benefits for the elderly ... and Medicaid for the pork farm subsidies ... and of course interest on the federal debt ... sixty three percent of the money was committed before receiving showed up ... in this but the whole year arguing about the other thirty seven percent ... ever to walk out of every four dollars and today go stores health care ... in nineteen sixty Healthcare was less than ten percent of all federal spending that was before Medicare before medicate ... today it's twenty five percent ... that on the road over the next decade to hit thirty three percent ... unless something big change ... number three a lot of people think that what the federal government doesn't employ a lot of people ... of course they're right for the four main people work for the federal government ... but the fact is a few fired every single one of ... them the secret service agent standing next to the president ... for the lady who collects tells the Yellowstone ... to the soldiers in Afghanistan ... USA for thirty five billion dollars in wages and benefits last year ... that would not reduce the deficit by even one third ... the point ... closing down federal agencies can save some money but not nearly enough to solve the problem ... number four ... we spend a lot of money on defence seven hundred billion dollars on defense in two thousand eleven ... I was one of every five dollars the government spent ... our defense budget is now bigger than the defense budgets of the next seventeen countries come by ... we spend one defense then China Britain France Russia Japan Saudi Arabia Germany India Italy Brazil ... South Korea Australia Canada Turkey ... the United Arab Emirates Spain and Israel put together ... number five ... the share of income most American families pay federal taxes has been falling for more than thirty years ... according to the Congressional budget office ... the nonpartisan over printer for Congress ... in nineteen eighty one the middle of the middle class paid eighteen point two percent of their income ... and income payroll and other federal tax ... in two thousand and seven that percentage was fourteen point three percent ... so how's the government should spend more and more ... one of the rich paid more than taxes partly because it made more they come ... into we borrow ... to borrow thirty six cents for every dollar we spend ... much of it from abroad ... since you decide how much is spent on benefits had a slow the growth in health care spending how many employees the government needs what to do about defense and how much to tax people ... you've pretty much solve the deficit problem ... everything else is the tale ... easier said ... then drawn ... so how all this all play out ... I think everyone just more than twenty five years and I don't think anybody knows for sure ... we talk to foreign experts of different political persuasions to give us some idea about the ways things could go ... Congress could call the whole thing off ... defective may Romney wins the election ... that's probably what they'll do ... delay the fiscal cliff for several months to give the new president a chance to come up with his own budget ... if you have United Republican government ... Republicans will announce next and ... hold reverses nothing to change ... we may not be overlooked ... change the law until presents a nod to ... nowhere Novak extend out for one year ... all of the expiring tax provisions ... and then within that year two tax ... reform ... said President Obama is re elected in Congress remains much is it is today ... than they could cut a deal that diverts for the fiscal cliff ... that might be real deal with the spending cuts and tax increases ... will significantly dent the deficit ... what could be a phony one that just allows them to call the whole thing off ... I think they must do something aam they don't want this fiscal cliff to happen ... and the most sensible thing to do is a combination ... of kicking the can down the road ... and of putting in place a framework ... for solving the larger problem ... what we need to do is credibly commit to fix entitlements and by credibly an incredibly is gonna be something that in Milan almost impossible to change ... and we need to put the U S on a sustainable path ... with a really really big changes to entitlements I think there's a greater recognition on the part of that even conservatives ... that the math simply doesn't work ... to solve its budget promise of more revenue think ... even the Liberals has accepted the idea that they're not can get ... on the Psalms palm of tax increases ... and so the concert is half to meet though the Liberals somewhere off of that ... the call on Thursday ... but there's another possible outcome is present Obama is re elected ... and that brings us right back here ... we could go over the class ... taxes would lurch upwards spending would become plainly ... it's not as unlikely as it may seem ... to have big tax hikes and become chairman spamming when you close to recession ... I think the key move negative impact of all that Allah wants apologies to lop maybe ... two to four percent of GDP growth next year so therefore it would definitely closing reception ... but if we tell well over the cliff ... it doesn't mean that we can call our way back up ... they still have a chance to come back and do it in January ... and said we have we don't have an immediate catastrophe in the tax is spread out over the year and spending cuts ... would all be in January ... but um it would be as a ... demonstration to the world ... debt to ... the United States was not handling its fiscal affairs and there was no ... own hand on the teller ... so how does this all and ... what will it take for Washington move for me yelling about the deficit ... is actually doing something about the deficit ... well it could take a crisis perhaps the stock market crash ... perhaps an artificial crisis like the fiscal cliff ... or it could take an outbreak of leadership ... and I honestly don't know which one is the least likely ... David Wessel for The Wall Street Journal ... I ...